Business Loan Rates UK

A business loan rate is what a lender charges you to borrow, expressed as an annual interest rate or an APR, and it is set case by case rather than published as one fixed number. For a straightforward unsecured term loan to a limited company, indicative APRs typically sit somewhere between roughly 6% and 25% or higher, but where your case lands inside that spread depends on the lender's read of your risk. We place business loans with lenders and match you to the ones likely to say yes; we do not set the rate or make the decision, and any figure quoted before a lender has underwritten your file is only an estimate.

The single biggest driver is trading history and affordability. A company with three or more years of filed accounts, steady turnover, and clear profit is a lower-risk proposition than a two-year-old business with lumpy revenue, and it will usually be priced accordingly. Lenders look at bank statements, turnover, existing debt, and whether the loan repayments are comfortably covered by cash flow. Thin accounts, recent losses, or a stretched debt position push the rate up because the lender is pricing for a higher chance of things going wrong.

Security is the next lever. An unsecured loan relies on the company's covenant and usually a personal guarantee from the directors, so the lender has less to fall back on and prices higher. A secured loan backed by property, plant, or a debenture over company assets gives the lender recourse if the business fails, which typically brings the rate down but adds valuation, legal steps, and time. The trade-off is real: cheaper money against your assets, or faster money at a higher rate with a guarantee.

Lender type matters more than most borrowers expect. High street banks tend to offer the lowest headline rates but apply the tightest criteria, want the fullest financials, and move slowly, so many good businesses simply do not fit their box. Alternative and specialist lenders (challenger banks, marketplace funders, and fintech providers) price higher but underwrite on wider criteria, use open banking data, and can decide in days rather than weeks. Part of what a broker does is know which camp your case belongs in before you waste time applying to a lender that was never going to fund it.

Term and loan size feed the rate too. A longer term spreads repayments and lowers the monthly cost, but you pay interest for longer, so the total cost of borrowing rises. Shorter terms cost less overall but demand more from monthly cash flow. Very small facilities can carry a higher rate relative to size because the lender's fixed underwriting cost is spread across less money. It is worth comparing the total amount repayable, not just the monthly figure or the headline percentage.

On fixed versus variable, most UK unsecured term loans are quoted at a fixed rate for the life of the loan, so your repayments do not move even if the Bank of England base rate does; that predictability is useful for budgeting. Some larger or secured facilities are variable, priced as a margin over base rate, which means the cost falls if base rate falls and rises if it climbs. Neither is automatically cheaper; it depends on the term, the product, and where rates go, and the structure available to you is the lender's call.

Short-term and revolving products are often not quoted as an APR at all. Merchant cash advances and some short-term business loans use a factor rate, a simple multiplier such as 1.2, meaning you repay 1.2 times what you borrow regardless of how quickly you clear it. A factor rate is not an APR and cannot be compared like for like; because there is no benefit to repaying early, the effective annualised cost can be far higher than the multiplier suggests, especially over a short repayment window. Always convert a factor rate into a total repayable figure and, where you can, an equivalent APR before you compare it to a term loan.

The honest summary is that there is no single UK business loan rate, and no broker can promise one before a lender has seen your case. What we can do quickly is tell you which lenders realistically fit your trading profile and funding need, then present your file well so it is priced on its merits. The final rate, and the decision itself, always rests with the lender.